How Ocean Shipping Works (And Why It's Broken)

this video was made possible by curiositystream watch an exclusive behind the scenes video finally answering the question of how we make these videos by signing up for the curiosity stream nebula bundle deal at curiositystream.com wendover in the early morning hours of august 22nd 2021 the maersk essec pulled away from birth 402 at the ports of los angeles california after navigating through the breakwater the ship made a westward turn beginning a two-month seventeen thousand mile twenty seven thousand kilometer voyage from america to asia and back this is in the context of today's ocean shipping industry a rather unremarkable journey on a rather unremarkable ship just 15 years ago though the maersk essex would have been truly extraordinary you see the essex boasts a capacity for 13 092 20-foot containers or teu 20-foot equivalent units in 2006 the zen los angeles entered service with the capacity for 9600 teu this was heralded with proclamations of a new era for shipping as the gen ranked as the single largest container ship sailing the oceans in summer 2021 though the ever ace took its maiden journey from asia to western europe with a capacity for 23 992 tu two and a half times more than the largest ship of a decade and a half ago as a point of comparison that means this one ship could carry every single container the 100 000 person nation of saint vincent and the grenadines received in 2020 at once and then add bermuda's annual container traffic on top of that now this trend towards larger and larger ships is indicative of another major trend in the shipping industry consolidation recognizing the incredible economies of scale in an industry founded on the principles of economies of scale the largest container shipping lines recently worked to reap a cost advantage that their smaller competitors could not by aggregating a larger quantity of containers onto fewer ships this is both a cause and effect of the fact that in 2000 the top 10 shipping lines controlled 51 percent of the global market but now they hold 85 percent bolstered by historically low ship building costs maersk msc evergreen and others elected to order these new behemoth ships rather than buy or renovate used ships to operate on their busy asia to europe and asia to western north america routes so a 13 000 tu behemoth like the essex a record breaker in the wrong year is now but a rather unremarkable workhorse of a ship fixed on a regular route from los angeles after an uneventful 10 days traversing the pacific the maersk essex stopped at its first port of call yokohama japan the stop lasted 8 hours as cranes unloaded containers from the americas then loaded more bound both east and westward soon enough though the essex pulled in its lines thrusted away from the dock and carefully navigated its way out of tokyo bay once it reached open water however it actually slowed down slightly for rather strategic reasons you see in 2008 in the early days of the financial crisis shipping lines faced a perfect storm of circumstance shipping demand was rock bottom and fuel costs were sky high the lines had to innovate to survive and so a working group at maersk came up with a stunningly simple proposition just go slower you see like most vehicles ships are more efficient at slower speeds but companies were always worried that operating a ship over a long distance below its designed cruising speed could damage its engine a quick way to squander any fuel savings maersk proved this belief false though and so began operating many ships at 14 to 18 knots rather than 22. this proved financially advantageous most industry players observed 10 to 25 fuel savings on a given journey and in time going slower became standard practice industry-wide of course when the shipping market's hot lines will operate at higher speeds since they'd rather get cargo to its destination and pick up more containers sooner but when it's not it's a simple way to simultaneously reduce operating costs and remove capacity from the system when it's not needed this is exactly what the maersk essec did after leaving yokohama with no need to get to its next destination quickly it reduced speed all the way down to 12 knots as it meandered through the east china sea which doesn't seem like it'd be a notable practice but slow steaming has been one of the most significant industry innovations of the 21st century given the slow pace it took five days for the essex to arrive at the port of shaman china where it sat for some 36 hours as thousands of containers were unloaded in the afternoon of september 8th though it pushed off once again ready to venture deeper into the far east on this stretch of the journey through the south china sea the vessel passed closest to the country that most of its crew members call home the philippines you see with few labor laws regulating who can work on ships sailing in international waters it's only natural that cost-conscious shipping lines look for staff from the lowest cost of living countries in short they look for those that they can pay least arising from a mix of culture tradition and education the philippines has established itself as the single largest source of maritime labor in the world some 77 of ratings unlicensed low-paid junior mariners that assist with some of the most physically demanding tasks are from the philippines overall the industry unperturbed by national boundaries is incredibly international a danish-owned ship will be built in south korea registered in panama captained by an american and crewed by mariners from the philippines india bulgaria russia and beyond the westernmost point of the maersk essex journey was here the port of vangtai vietnam it tied up to its dock on september 10th these brief port visits offer most crew members some rare moments of continuous free time as the cranes handle the work of loading and unloading the ship the crew is typically allowed to leave the ship see the sights experience some nightlife so long as they're back on board in time however because of the border restrictions imposed by many countries in response to the covet 19 pandemic this practice of brief short visits to foreign countries has become impractical or impossible further toughening an already difficult style of life so after it's 44 hours physically but not practically in vietnam the essex started spinning its propeller once again on september 12th and the crew members went back to an endless routine on an endless ocean now some of vietnam's primary exports include shoes clothing and textiles these are typically not very price dense products for example a box of cheap shoes takes up a good amount of space but might only sell for twenty dollars in the us however the fact that a company can manufacture shoes in vietnam ship them across the world to the us and still turn a profit on a 20 sale price is indicative of just how unbelievably inexpensive ocean shipping is on a human level before the tumult that kovid brought to the industry shipping lines typically charged about one thousand dollars to carry a 20-foot container from asia to the us that 20-foot container could hold some 3 500 shoeboxes meaning the cost to transport a shoebox 8 000 miles or 13 000 kilometers across the world from a port in vietnam to one in california was about 30 cents when people talk about ocean shipping enabling globalization this is what they mean the fact that transporting a shoebox quite literally to the other side of the world costs less than a single mcdonald's chicken nugget means that location and distance are hardly factors in today's world of manufacturing the maersk essex's next stop was hong kong were adopted at the quite sim container terminal for 32 hours between september 15th and 16th it then took a slow meandering path around the territory dropped anchor for 24 hours then worked its way into the port of yanchan located near the factories of shenzhen now with its capacity for 13 092 containers there are of course 13 092 different spots where a container could go on the maersk essex naturally in practice it's far from random complex expensive computer programs crunch a huge variety of factors to spin out the ideal storage plan for a given journey to start with there's the obvious stuff you want in this journey's case the containers for yokohama to be placed on top of those for shaman so one doesn't have to unload shaman containers to get to the yokohama ones when there then the program needs to be sure that certain containers are in particular positions refrigerated containers need to be in a spot with a power supply while those carrying goods with the potential for leakage like animal hides need to be placed in a spot where they can be easily accessed by the crew while underway meanwhile other containers must not be in particular spots this table displays the regulations for the storage of hazardous materials it indicates that items that are dangerous when wet for example must be stored at least six meters away from radioactive substances while corrosive materials must be stored in a completely different compartment of the ship from infectious substances on top of these and a multitude of additional factors the ship has to be roughly balanced meaning overall the storage plan is a massive game of 40 tetris that only a computer can perfect after 52 hours of implementing that plan the essex made a quick overnight journey up the coast to arrive back in shaman where it made its longest stop yet 56 hours loading a final batch of containers this was also the last chance for the ship to load up on food and fuel before what would be by far the longest leg of its journey finally just before 6 am on september 24th loading was complete and it was time to shuttle another payload of thousands of containers to north america the maersk essex passed taiwan worked its way through the east china sea then threaded the gap between south korea and japan after hugging the country's coast it sailed through the busy bottleneck of the tsugaru strait and entered the cool open waters of the northern pacific the essex entered american waters for the first time as it sailed near the alaskan aleutian islands but then exited the country's exclusive economic zone as its track started to trend south after nearly two weeks on the move the ship's path started to parallel the california coast until the essex passed the state's channel islands and turned east on october 6 it slowed to a stop dropped anchor and then just sat on october 7th it did the same nothing more happened on october 8th 9th 10th in fact for the next 17 days a longer stretch than his trans-pacific journey the maersk essex sat on anchor within sight of california's largest city waiting for an open birth the time finally came on october 23rd after 62 days the maersk essex arrived right back where it started birth 402 at the port of los angeles now the port of los angeles is located right next to the port of long beach and while the facilities are technically independent from each other they take advantage of shared infrastructure like roads and railways combined the complex handles about 40 of all container cargo coming into the country this is because like most of the industry ports benefit hugely from economies of scale you see for imports coming from asia it rarely makes sense to send ships to the east coast despite that being the side of the country where the majority of the population lives that's because that would require routing through the panama canal whose largest set of locks can only accommodate ships up to 14 000 teu smaller than many new container ships and even then transit fees are well into the hundreds of thousands getting a slot can be difficult and routing via the canal extends journey times significantly that's why most asian imports are offloaded on the west coast but the us really only has five major deepwater container ports on the pacific long beach los angeles oakland tacoma and seattle located in by far the largest metro area on the coast the ports of long beach and los angeles have naturally evolved into the busiest as they have the greatest access to labor transport and infrastructure these three factors are the most important for ports because after all nobody's shipping things to the port of los angeles they're shipping things through the port of los angeles it's all about getting cargo containers from the ship and on to onward transportation as quickly and efficiently as possible now the port itself is essentially the landlord to a number of private companies that actually run each container terminal for example this facility is run by using terminals this one by everport terminal services this one by phoenix marine services and this one where the maersk essex started and finished its journey by apm terminals now once the essex was docked the first step was to physically remove containers from the ship which was accomplished with these massive cranes each typically unloads 30 to 40 containers per hour onto trucks that move the containers to a temporary storage location somewhere in the terminal then there are three possible onward transportation methods first they could be loaded on a smaller ship or barge that moves the containers to a smaller nearby port although this is rare in los angeles compared to a place like the pearl river delta where there are plenty more water access population centers and industrial areas second they could be loaded onto freight trains this direct access to railways the cheapest method of land-based transportation is in fact a major advantage of the port of los angeles by far the most common method of onward transportation from the port of los angeles is however trucks they enter through the terminal's gates hitch up to a waiting container then drive it to its final destination whether that be on the other side of the city or country so why is it that the maersk essex had to wait 17 days just to unload its cargo what part of this system is broken well in short all of it there's no one factor contributing to the asia to north america supply chain slowdown but rather the system is just overloaded most indicators suggest that trans-pacific shipping demand is up about 25 compared to the pre-pandemic baseline which isn't a massive increase but it's sort of like congestion on the highway traffic is an exponential problem when one lane is closed on a busy four-lane highway your journey takes more than 25 percent longer stopping and starting takes time that adds up and slows the overall flow down exponentially this is why ramp meters work they prevent excess traffic from entering a highway keeping it at capacity and flowing freely so even if it takes longer to get on the highway each person's overall journey time is less it's the same situation with ocean shipping it's a system with a capacity so when it's overloaded by 25 the slowdown is more than 25 once a container is offloaded it's placed into a sprawling terminal filled to the brim with an increase in traffic more trucks than usual are waiting in line to get through the terminal gates to pick up their cargo which means picking up a container takes longer which means a truck can't get back to the terminal as quickly which means there are fewer trucks available to pick up containers which means more and more containers stack up in the terminal with containers leaving the port less quickly there's less space for new containers which means it takes longer to unload ships which means ships are having to wait longer to get into the port which means there's less shipping capacity since journey times are longer and ships can't get back to asia to pick up a new load as quickly meanwhile all the congestion means that terminal operators are restricting or prohibiting shippers from sending empty containers back to asia which means that shippers in asia are struggling to find containers to use which means that they're having to buy new containers which pushes up their shipping costs and then all the supply chain chaos means that shippers are sending goods earlier which increases demand which furthers the supply chain disruption it's not so much a vicious cycle as a vicious web chaos compounding chaos this is what happens when disruption hits an industry designed to be extraordinarily standardized a system so reliant on economies of scale that the world's largest economy has to rely on five interface points with the world's largest manufacturing hub it's a perfect system a system responsible for many of the revolutions of the last century but systems reliant on perfection are those most vulnerable to disruption for now though the cogs keep turning the mars essex is out there somewhere between california and vietnam shuttling another load of containers from continent to continent probably the most common question i receive is the most obvious one how do we make these videos i've finally gotten around to answering that by making a video following the process of making this video from start to finish however i don't really have a natural place to put that on youtube so like all the companion videos we make it's on nebula that's because nebula is the creator founded and run streaming service with no algorithm no ads just the very best stuff us creators can make whether it be these quick companion videos long form big budget nebula originals or our regular videos early and ad-free of course we want as many people to watch this stuff as possible so we partnered with stream to make signing up super affordable it's less than 15 for an entire year but signing up there means you also get access to curiosity stream 2 where you can watch their huge catalog of top-notch non-fiction shows and documentaries like this episode of engineering the future about how the future of cargo ships might actually be a technology of the past wind power so two streaming 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Channel: Wendover Productions

Views: 3,638,913

Keywords:

Id: 8d5d_HXGeMA

Length: 19min 17sec (1157 seconds)

Published: Wed Nov 17 2021

Reddit Comments

[u/Leoihavenoidea]

A little trick for sound recording without a studio: record under a blanket. It reduces reverb most other noises from the environment. (but i didn't hear a difference in to the other videos i just saw it in the Nebula special).

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Love your videos and your hairstyle :)

[u/Sadat_Shahriar]

This was a very below average video. This video did not teach us anything new because it just repeated the concepts in "why there are so many shortages ?". This video felt more like a story than a video essay.

Don't get me wrong i am a big fan of wendover.